PX is a company engaged in producing and distributing industrial gases, primarily in North and South America, Europe and Asia. This company, with headquarters in Connecticut offers atmospheric gases for its industrial gases business and process gases.

The company also designs, engineers and builds equipment that produces industrial gases for internal use and external sale.

The company’s gas operations are managed geographically and in 2010, nearly 94% of sales were generated in its four segments: North America, Europe, South America, and Asia.

Praxair is a company that is constantly focused on expanding its operations in terms of regions and the incorporation of new customers has accelerated increases in profits.

It is expected that, by 2015 the company achieves sales growth between 8% and 12%. Apparently 45% of the sales will be represented by emerging markets, such as Asia and Mexico. Moreover, operating profits are expected to be within 10% and 15% benefiting from higher productivity and pricing actions. EBITDA is expected to represent 30% of the sales and capital spending near 15% thereof.

Interestingly, the company is permanently looking for maintaining free cash flow to pay more dividends and repurchase shares.

That is not all. The company has significant growth opportunities, including the hydrogen market for refining; refining; oxygen for healthcare; and nitrogen and carbon dioxide for oil and gas production.

Praxair offers competitive advantages to customers with the development of new products and applications; production techniques; and distribution of industrial gases.

Unfortunately, in terms of sales, although they are increasing, 50% of them are made outside U.S. and thus are subject to risks that are usually found in foreign operations, such as foreign currency exchange rates fluctuations, export controls and other economic and political policies of local governments.

The last quarter results have been positive and have not shown serious headwinds.

EPS range from $5.40 to $5.45 on sales for $11.2 billion.

Generally speaking, quarterly revenue has increased 14% compared to the same period last year.

In terms of operations, Praxair has reported a strong quarter, where margins have increased 10 points to 21.8%.

Regardless of the competition within the industry, Praxair will continue to outperform its peers.

As it is financially healthy, the most important customers are willing to sign long-term contracts and thus index the main input costs. These generate visibility in PX's earnings.

Despite the economic uncertainty, management reiterated that the project backlog remains robust at $2.7 billion and they haven’t seen a slow down in RFP activity yet (added three projects in the third quarter). Looking ahead, PX believes most of the growth will come from China, India and Korea, as those economies are expected to grow the fastest. In NA, the backlog is expected to be mostly driven by the energy/refining markets.

Overall, PX expects the backlog to contribute $0.20-0.25 of incremental earnings in 2012.

This solid situation has been boosted by Praxair's CEO Stephen Angel, who has played an important role in the company's growth since he took his position. The management team also shows impressive tenure. They are focused on aligning management's interests with those of shareholders.

“Praxair is a very attractive stock. Despite the headwinds in energy, results have shown that it has outperformed and is permanently looking for investing to enhance services to customers,” said Tuna Amobi, and S&P analyst. “Access to emerging nations in Asia will certainly involve growth.”

Overall, despite the macro uncertainties, management seems confident that aside from Europe and electronics, most of the end markets and geographies should hold up relatively well and the environment is nowhere near where it was in 2008/09. In the U.S., management expects demand in the steel/chemical markets to remain flat in fourth quarter while the energy market

Manufacturing demand is also expected to increase as producers of capital-intense projects continue to invest money.

In the international area, the results will likely be mixed. In Asia and South America, management remains upbeat regarding the growth prospects and expects continued double-digit growth driven by the strong project backlog

I like the fact that both Chris Davis and Ruane Cunniff, two Gurus I follow, increased their positions in PX in the last quarter. Both portfolio managers select only quality-businesses and only increase their existing stocks when they are sure that the company's prospects are favorable.

As we can see in the charts, both managers initiated the position last year and evaluated the last market correction as an opportunity to add in PX.

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